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Robin D.
Robin D., Senior Tax Advisor 4
Category: Tax
Satisfied Customers: 13339
Experience:  15years with H & R Block. Divisional leader, Instructor
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My rental just got foreclosed on in 2014.Bank didnt send me

Customer Question

my rental just got foreclosed on in 2014.Bank didnt send me a 1099 for it.Can they still send me one in 2015?ND MAKE ME PAY THE TAX ON IT?
Submitted: 1 year ago.
Category: Tax
Expert:  Robin D. replied 1 year ago.
Hello,Generally, they will file Form 1099-C for the year in which an identifiable event occurs. If they cancel a debt before an identifiable event occurs, they can choose to file Form 1099-C for the year of cancellation. No further reporting is required even if a later identifiable event occurs with respect to an amount previously reported. Also, the lender is not required to file an additional or corrected Form 1099-C if they receive payment on a prior year debt.They can file the 1099C in 2015. An identifiable event is one of the following.A discharge in bankruptcy under Title 11 of the U.S. Code. For information on certain discharges in bankruptcy not required to be reported, see Exceptions,later. Enter “A” in box 6 to report this identifiable event.A cancellation or extinguishment making the debt unenforceable in a receivership, foreclosure, or similar federal nonbankruptcy or state court proceeding. Enter “B” in box 6 to report this identifiable event.A cancellation or extinguishment when the statute of limitations for collecting the debt expires, or when the statutory period for filing a claim or beginning a deficiency judgment proceeding expires. Expiration of the statute of limitations is an identifiable event only when a debtor's affirmative statute of limitations defense is upheld in a final judgment or decision of a court and the appeal period has expired. Enter “C” in box 6 to report this identifiable event.A cancellation or extinguishment when the creditor elects foreclosure remedies that by law extinguish or bar the creditor's right to collect the debt. This event applies to a mortgage lender or holder who is barred by local law from pursuing debt collection after a “power of sale” in the mortgage or deed of trust is exercised. Enter “D” in box 6 to report this identifiable event.A cancellation or extinguishment making the debt unenforceable under a probate or similar proceeding. Enter “E” in box 6 to report this identifiable event.A discharge of indebtedness under an agreement between the creditor and the debtor to cancel the debt at less than full consideration (for example, short sales). Enter “F” in box 6 to report this identifiable event.A discharge of indebtedness because of a decision or a defined policy of the creditor to discontinue collection activity and cancel the debt. A creditor's defined policy can be in writing or an established business practice of the creditor. A creditor's established practice to stop collection activity and abandon a debt when a particular nonpayment period expires is a defined policy. Enter “G” in box 6 to report this identifiable event.The expiration of non-payment testing period. This applies only to entities described in numbers 1, 2, 3, or 4 under Who Must File, earlier. This event occurs when the creditor has not received a payment on the debt during the testing period. The testing period is a 36-month period ending on December 31, plus any time when the creditor was precluded from collection activity by a stay in bankruptcy or similar bar under state or local law. Enter “H” in box 6 to report this identifiable event.The creditor can rebut the occurrence of this identifiable event if:The creditor (or a third party collection agency on behalf of the creditor) has engaged in significant bona fide collection activity during the 12-month period ending on December 31, orFacts and circumstances that exist on January 31 following the end of the 36-month period indicate that the debt was not canceled.Significant bona fide collection activity does not include nominal or ministerial collection action, such as an automated mailing. Facts and circumstances indicating that a debt was not canceled include the existence of a lien relating to the debt (up to the value of the security) or the sale or packaging for sale of the debt by the creditor.Other actual discharge before identifiable event.
Expert:  Robin D. replied 1 year ago.
Additional information:You would report the cancelled debt should they send the 1099C. The rental is deemed sold and the 1099C would have the information to report that event. You may not have a gain form the "sale". Then you would not have tax to pay.

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